Thread by @HBoushey

This morning, I’m testifying before @housebudgetdems about how economic inequality is harming our economy—and what policymakers can do to fix it equitablegrowth.org/testimony-by-h…

GDP growth has been treated for decades by pundits and policymakers alike as synonymous with prosperity.

But where overall growth of the economic pie was once broadly representative of the lived experiences of most Americans, that is no longer true.

The distribution of wealth across U.S. households is now even more unequal than income:

The top 1% now controls 42% of all wealth and the top 0.1% controls more than 22% of all wealth in the U.S. economy--3x as much as a generation ago.

The Fed's new Distributional Financial Accounts also show strong wealth concentration—10% of the population hold 70% of all U.S. wealth

- The bottom 50% of wealth owners have seen no growth in net wealth since 1989

- The top 1% saw their wealth grow by almost 300% since 1989

Moving up the economic ladder and earning more than the previous generation is at the heart of “the American Dream.”

But new research shows that inequality is hindering upward absolute mobility, obstructing people from moving up as the rungs of the ladder grow further apart.

Evidence increasingly shows that inequality constricts growth by:

- Obstructing the supply of people & ideas into our economy & limiting opportunity

- Subverting the institutions that manage the market

- Distorting demand through its effects on consumption & investment

Policymakers can preserve the best of our economic and political traditions by pursing policies that both reduce economic inequality AND boost growth.

1. Measure what matters—Stats we often rely on to inform us about the state of our economy are less representative of the experience of the majority of people.

Congress should require the release of growth data that is broken down by income group to ensure no one is left behind.

2. Increase bargaining power for workers—Policymakers must ensure there’s a bulwark against concentrated economic power by improving workers’ ability to bargain with employers over pay and working conditions.

3. Increase the #minimumwage— Research indicates that higher minimum wages help workers in a multitude of ways, by lowering the poverty rate, increasing earnings for low-wage workers, and decreasing public expenditures on welfare programs

4. Address monopoly power—The U.S. economy is increasingly dominated by a fewer firms, meaning higher profits for shareholders but higher prices & lower wages for typical families—especially as workers face #monopsony labor markets in which firms have the power to set low wages.

Congress needs to clarify that #antitrust laws protect competition—in all of its forms.

But on top of everything else, in recent decades federal antitrust enforcers have not had the resources they need to do their job of preventing anticompetitive consolidation.

5. Tax wealth—Policymakers have room to raise taxes at the top of the income ladder, and empirical analysis indicates that this will likely have economic benefits above and beyond raising revenue.

Given that the top 1% controls more than 40% of U.S. wealth, and these fortunes have been amassed in part by utilizing tax shelters and preferential rates only available to the truly well-off, one avenue to focus on is how to tax wealth more and better.

6. Enable all children to thrive at an early age—Investments in people are as important to the economy as physical capital.

We need a national commitment to ensuring equal access to primary and secondary school and to ending unequal access to early childhood education and care

7. Allow workers to manage their lives—Over the course of their careers, most workers will experience a life event they will need to address outside of work

#Paidleave and stable scheduling policies support workers to navigate work-life conflict—a boon to the economy overall

8. Sustainable and productive investment—Policymakers should make greater investments in large-scale projects, such as upgrading the nation’s failing transportation infrastructure, addressing climate change, and investing in people and families.

When we start from a focus on who gains from rising economic prosperity, we see that rising economic concentration in income, wealth, and firms constricts growth and productivity by obstructing, subverting, and distorting the way our economy functions.

Policymakers need to act to reset our national policies and make sure our economy is not longer bound by inequality.
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